AfDB Approves $120m for Hydropower Plant

By Adedapo Adesanya

The African Development Bank (AfDB) has approved a $120 million loan to fund the construction of a 50 megawatts hydropower plant in western Tanzania, the bank has said.

The Malagarasi hydropower project will provide reliable renewable energy to households, schools, clinics and small and medium-sized enterprises in Kigoma region, the AfDB said in a statement.

The project’s overall cost is estimated at $144.14 million while the bulk of the $120 million will be sourced from the bank group’s sovereign window, with an additional $20 million contributed by the Africa Growing Together Fund. The government of Tanzania will provide the remaining $4.14 million dollars, the statement said.

Speaking on this, the President of the bank, Mr Adesina Akinwumi, said the approval of the project is a reflection of the bank’s commitment to helping the government of Tanzania to “accelerate its transition to more inclusive and sustainable growth through the production of clean, reliable and affordable electricity.”

The hydropower plant’s expected average annual output of 181 GWh will meet the electricity needs of some 133,649 Kigoma households, bringing the region’s electrification rate closer to that of the rest of the country, said the statement.

According to the statement, the project is expected to create about 700 jobs during construction, cut the region’s electricity generation costs to approximately 0.04 dollars per kWh, down from the current 0.33 dollars per kWh, and also reduce reliance on greenhouse gas-emitting fossil fuels.

“The cost of doing business will also fall because the industry will no longer need to maintain costly back-up generators,” said the statement.

The project aligns with Tanzania’s National Development Vision 2025 and its Second Five-Year Development Plan (2016/17 – 2020/21) and complements other regional initiatives, including the North West Grid 400 kV Nyakanazi-Kigoma transmission line project, which the Bank is financing in parallel with the South Korea Economic Development Co-operation Fund.

The Malagarasi Project will also directly contribute to the Bank’s Light Up & Power Africa High-5 development priority, which is being implemented through the institution’s New Deal on Energy for Africa strategy.

Commenting on the board’s approval, Mr Henry Batchi Baldeh, Director of the Bank’s Power Systems Development Department, noted that the project is “one of the flagship physical infrastructure investments in Tanzania’s Development Vision 2025 and Tanzania’s current Five-Year Development Plan and that it will increase the share of renewable energy in Tanzania’s energy mix.”